Okay. Good afternoon everybody and uh welcome to the audit committee for Tuesday, May the 19th at 1:30. I'll call this meeting to order. I need a motion to adopt the agenda. Councelor Thompson. All those in favor? Opposed? that carries disclosures of pecuniary interest in the general nature thereof. Seeing none, uh we have no delegations for this. Uh but we do have one piece of schedule business which is uh the uh draft consolidated financial statements and we're going to have a presentation by Maria Kushnod. Is that how you say that? All right. Uh from KPMG. So Maria, come on up. The floor is yours and uh this is a about a 25 or so minute presentation. So uh welcome. >> Okay, perfect. Thank you very much. Good afternoon everyone. Um as uh Mr. Chair just mentioned, I'm Maria Kushnoo. I'm an audit partner in private enterprise practice in the GTA. Our offices are at Highway 7 in Jane. I don't know if you've seen the Van Metropolitan Center. That's where we're located. I'm here today to talk about the results of the audit for the financial statements of consolidated city of Richmond Hill for the year ended December 31st, 2025. So, if you can please put up the slides on the screen. Okay. So, if you can move it to move the slide deck to page four, please on the audits highlight page. So, I'll start here. So overall, we're pretty much substantially completed the audit. There are some minor audit procedures that are still pending at this point. Uh management is working with us to complete those procedures. Uh we're not expecting any major adjustments or issues come out of that remaining uh sort of work that we're waiting to complete. Uh for the rest of the audit procedures, they're all completed. Uh there are no significant control deficiencies that we identified as a result of our audit. There were there was one corrected and one uncorrected audit adjustment which I'll speak to in a second. Um there were no significant changes from our audit plan that we communicated to you earlier this year. In terms of some of the other areas of focus, so we will talk today about uh some of the presumed risks of fraud that the Canadian auditing standards require us to include in our audit. um and some of the other areas of focus that we complete including some of the main financial statement captions. With that, if we can advance the slide to page five. So, uh I just talked about uh the status of the audit. Um, outside of some minor procedures, uh, everything else that's listed here is our standard items that will be completed as part of the FS approval process, which I believe is scheduled to take place in the next council meeting on June 11th. Um, at that time, we will complete our subsequent event inquiries um, and signing of the management representation letter, which are standard items. With that, we can move on to P the next slide. So that's the first presumed risk of fraud. So the Canadian auditing standards require us to include this presumed risk in all of our audit engagements. This is not specific to City of Richmond Hill. Um and what this really means is management is in a unique position to be able to perpetrate fraud because of their ability to be able to override controls. Uh we look at these control uh the underlying controls and the some of the procedures that we complete in including testing of journal entries uh performing retrospective review of estimates and any unusual transactions or any new transactions that take place during the year. We look at them very very closely to make sure that there's no management bias in play. Um we've completed all of these required procedures and we did not identify any red flags that should be reported to you. Next slide please. So the next slide talks about tangible capital assets. Uh every year we look at tangible capital assets. This is the biggest item on your uh statement of financial position in terms of assets. Um we've completed all required procedures. There's only one finding to be reported which is uh both a corrected and an uncorrected adjustment. This pertains to some items that were uh expensed in the prior years based on some incorrect guidance that was received from the predecessor auditor that came to light as a result of the audit this year. All of these items have been corrected through the current year. The only reason you have an uncorrected out of period error is because some of the balances that were corrected in the current year they pertained to prior year. So they were reported in prior year Pier now but the ending TCA balance and the ending uh accumulated surplus is correct as at December 31st 2025. Okay, next slide please. So deferred revenue earned um is another area of uh focus for us especially the obligator uh the obligatory reserves that are included in deferred revenue because of the restrictions that are attached to these funds. Uh we do look at it closely in terms of the revenue that is recognized out of this fund to make sure that uh the funds are spended on the ultimate uh restricted purpose. We have completed that testing and nothing to report uh on this uh FS caption. Moving on to employee future benefits. So employee future benefits represent a liability for your actuarial requirement to to service some of the uh benefits that the employees are entitled to whether they're uh postretirement benefits, some of the health and dental benefits. uh we consider this to be an estimate because there is an actuarial assessment prepared by a management specialist. We take a look at the reports that the actuary issues uh uh on behalf of the city of Richmond Hill. We engage our own actuarial specialists at KPMG. They look at the data, the assumptions, the methods that are applied to be able to come up with this liability and we did not identify any issues in relation to this. So everything that is reported in the financial statements for employee future benefits is correct. Okay. So moving on to investments. So the only item I wanted to highlight here is that because of the changes in the accounting standards in the past uh public sector entities and municipalities uh they would report all of their investments at cost and fair market value was disclosed but in the books they were recorded at cost. When the new standard came into play a couple of years back um some investments are required to be reported at fair value others can still be reported at cost. So what we've highlighted here in the top right corner where we say estimates is the two items that are reported at fair value. Everything else is reported at cost. So those two items are principal protected notes and equity fund investments. But we've completed all of our procedures and the investments that are reported. They're accurate. They're correct. The disclosures are fine. So no issues there. Okay. So with that we can move on to contingencies. Um nothing really I want to cover here in more detail. Uh I mean we've completed our work related to contingencies. We've uh obtained legal confirmations from external firms that are involved in in any legal cases that are um claimed against the city. We also look at the insured uh liability listing that the city has. You have good insurance in place. So, no real issues to report in terms of contingencies here. I'm going to skip the next couple of slides because there there's nothing to report there in terms of new accounting standards or accounting policies and practices. Everything has stayed consistent year-over-year. Um, we've already covered the uncorrected misstatements. Maybe I can very quickly cover the control deficiency slide. So, one more please. Yep. So here what essentially what we're saying is we've provided you with certain definitions that we accountants and auditors use uh in our world in terms of what a control deficiency means. Um what is a significant control defic deficiency and whatnot. For the purposes of the city audit though, we don't take a controls-based approach and that is consistent with other municipal audits that we um we execute because of the nature of these entities um and the environment that they're in. It it doesn't allow for controls based approach. So there's no issue there. So we don't test controls. However, we do keep an eye out uh when we're completing our substantive procedures to see if there are any sort of uh red flags or any control deficiencies that come to light through our substantive procedures. Um so what I'm reporting to you today is that we did not identify anything as part of our substantive audit work as well. Okay. So the next couple of slides talk about our audit quality framework. I'll leave that for your own read. It's essentially um our uh firm's commitment to audit quality and the framework that we have in place to make sure that we execute highquality audit engagements. Um it's nothing further than that that I want to comment on. Um and with that we get into the appendices which I'm not planning on covering. They're there for your information. Uh but I'll stop here and if there are any questions I'm happy to take them. >> Okay. Any members of the committee or councelor Silivitz who is online any questions? This is one of the few occasions where I find uh nothing to report is is actually good news. So thank you very much for all that. No other questions. >> Okay. Go ahead. Is that is that >> that's it? Okay. All right. Thank you very much. >> No problem. >> Thank you. >> Okay. Thank you. Um so we have um a motion in front of us. Uh regional local counselor depollo, do you want to move that? >> Yep. Uh happy to move the recommendations in in uh 51 AB and C and um you know I just want to thank APMG for their work and and uh once again this is se several years running now. uh you know the fact like you said um this is this is an extensive process that's undertaken and and uh it's a good a a good a good checkup a good analysis a good a good result so I'm happy happy to move this and for approval >> great okay um no comment okay so I I just uh thank you very much to to uh you and your team for doing this this is um I read the it and it the report and it really is quite uh incredibly in-depth and and I guess that's what audits are all about is to make sure that we're testing the work that our staff does to make sure that we're doing it in a way that is excellent and that uh it's uh we're being really good uh stewards of of public funds and I think that's what this is all about and this is just confirmation so I'll get to our our staff contingent uh in doing the the day-to-day work that they do in managing our finances in Richmond Hill is really really important and it's uh uh confirmed through this audit. I think that uh we're doing a great job and and so director Lee uh Commissioner uh thank you very much to you and your team for all of the great work that you do to uh to keep us on the right track in terms of finances in Richmond Hill. I've I've always known that but it's nice to hear that from an external source as well. So thank you very much. So with that being said, I think we have a motion on the table. All those in favor opposed. That carries unanimously and that will move this to uh council I guess sometime in June. So we'll we'll have the uh we'll take a look at it again at that time with the rest of council. So with that being said, I think the only other really exciting part of the the meeting which might even be more exciting than the audit itself is the motion to adjurnn. Councelor Thompson. Oh, you want to comment on that? Um, sorry and I may have misunderstood something here. So, I thought we were uh acknowledging the presentation and that we would still have the staff report to >> Yes. Yes, we can. We we've tried I think we kind of did both of those at the same time. The motion was moved by region local councelor Thompson, but if you got a comment, we can certainly do that. >> Uh, my apologies uh for the misunderstanding. Um, yeah, I just I did have one quick question in regards to the cash and cash equivalents. Um so if I understand correctly we decreased uh from 120 million approximately down to 72 uh.5 something like that. Um and you know from 2024 to 2025 and it says that it was attributed to uh capital activity. So I'm just wondering what those capital projects were that drove that that particular change. treasure >> through the chair to councelor Thompson. So the change has to do with the investments um overall as well as the accounts payable. So we did have um more higher amount of supplier invoices. So I can't speak to the the actual capital projects that you were questioning, but overall it's a higher payment in accounts payable as well as investments. >> Okay. So um thank you uh through the chair. So G given that answer is that a trend that's likely to continue in 2026. uh through the chair to councelor Thompson. It's a combination of timing as well. Um to your point, it's a trend that we will see in 2026 as well. So, it's a combination of both. >> I see. Um okay, I'll leave it at that. Thank you for allowing me to get those questions in. >> Okay. If there's any further questions you have between now and council as well. So, okay. So, we have a motion to adjurnn on the table. All those in